SFL – Sale and Acquisition

In its third quarter results 2004 press release Ship Finance International Limited (the “Company”) informed that it had entered into discussions with Frontline Ltd (“FRO”) to buy three VLCCs from FRO and subsequently lease the vessels back to FRO. The Board today announces that the Company has agreed to buy the first two vessels, the Front Century and Front Champion, for $196 million en bloc. Delivery is expected to take place this week. The vessels were valued by independent appraisals as of 31 December 2004 to $207.3 million.
The vessels will be chartered back to FRO for 199 and 204 months respectively, basically following the structure in place for the other vessels chartered to FRO. This includes a 20% profit split element in excess of the base charter rates mentioned below.
The Board also announces the sale of the Suezmax Front Fighter for $68.25 million. The charter of the Front Fighter to FRO will be cancelled as a result of this sale.
The new time charter rate for Front Century and Front Champion will be $31,368 per day declining to $28,492 per day in 2019 (360 day basis).  The charter rate consists of two components – the first part will be the same rate that was in the Front Fighter rate applied on the two vessels, and the second part will be based on the incremental investment made by SFL of $127.75 million.
FRO is also working on acquiring a third VLCC, Golden Victory, from another German KG. It is too early to tell if this will end up involving the Company in the same way as for the two abovementioned vessels. The Board expects to revert with news on this in the near future.
The Board has earlier stated it will focus on growth which can support strong and increasing dividend yield over time. The above transaction is the first transaction confirming such a strategy. It secures a 6.3 % increase in cash flow before any profit sharing.
Chairman Tor Olav Troim says in a comment: The new transaction is accretive to Ship Finance on a net asset value basis as well as on an earnings basis. Ship Finance is well positioned for further growth. The Company will subsequent to the transaction including financing of the two vessels, and after completion of the refinancing of the $1,058 million bank facility announced in the third quarter report and payment of the 20% profit-sharing from Frontline for 2004 have a liquidity position of more than $280 million.
The Strong liquidity gives the Company an excellent position to look for new growth opportunities which can secure a further increase in the dividend to shareholders.
January 24, 2005
The Board of Directors
Ship Finance International Limited
Hamilton, Bermuda

Questions should be directed to:

Tor Olav Troim: Chief Executive Officer
+44 207 824 5530

Oscar Spieler: Chief Executive Officer, Frontline Management AS
+47 23 11 40 79

Tom Jebsen, Chief Financial Officer
+47 23 11 40 21